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12/6/08

Hi up there, Canadian readers. Hope you're enjoying the ever warmer weather the same as Otto down here.....no?....getting a bit chilly outside?....really?...oh never mind. At least it's not likely to snow round your way....oh really?...oh, ok....

Anyway, here's what I wanted to offer. Get your totally free, gratis and for nothing subscription to Energy Management right here, thanks to IKN. This offer is only available to residents of Canada, so if you live in Seattle hop on a boat and find yourself a cybercafe in Vancouver. Here's the full blurb, and here's the link:

Energy Management -- Canada's only energy management publication that delivers to the industrial, institutional and commercial markets! It is geared specifically to professionals who are working to make a difference in their plant and building portfolios through the introduction of energy efficient technologies and energy efficient management practices.

The magazine features expert columnists, legislation updates, best practice case studies, and the latest energy efficiency and cost-savings products from lighting, power transmission and drives, heating ventilation and air conditioning (HVAC), energy management systems, test and measurement, building automation systems and much more.

Never underestimate the power of a dead Inca. Atahualpa's Revenge is Peru's world-reknowned stomach upsetter named after the last Inca king (for want of a better phrase) who was betrayed and killed by Pizarro and the first conquistadores. And it looks like it might have claimed another victim.

Canada's PM Stephen Harper came back from the Peru APEC summit last week "feeling unwell", and the lack of presence due to the iffy food served in Lima may well have been the catalyst to set off the current leadership turmoil and coalition attacks on his government. Here's Canada's National Post with the goods:

While the opposition leaders and the Liberal leadership candidates were plotting, Mr. Harper was in shock. Still sick from a trip to the APEC conference in Peru, the previous weekend, his recovery was hardly aided by the realization that his fate no longer lay in his own hands. The opposition parties had a combined vote of 163 MPs, 20 more than his own party.

At the time of the APEC summit, this humble blog mentioned there were over 100 cases of bad stomachs due to the crap food served to guests and dignitaries (they blamed it on the weather...seriously). Once the conference was done 225 cases in total had been registered, but none as important than Harper's, I'd venture. Coup d'etat in Canada? Blame it on the cuy, ceviche, seco de cordero, bife de alpaca and chuños, people.

More proof (as if it were needed) that Petaquilla Minerals' (PTQ.to) management are bare-faced liars. With consummate timing, Reuters yesterday published this note entitled "Panama Petequilla gold mine to start production soon". Over at Bananama Republic the muck is getting thrown at the reporter Andrew Beatty for getting the story wrong. Quite right too, as it seems Beatty is taking the Simon Romero "fruity rum punch beats fact-checking every time" attitude to local current affairs. However Beatty in his laziness may have done us all a big favour. He actually gets PTQ's mouthpiece, Tom Byrne, on record and in print as saying:

"Petaquilla now has permission from Panama's environmental regulator to go ahead with the project."

Joy of joys, this is a confirmed and confirmable whopper. Big fib spotted. This is 100% false. Liar, liar, frilly panties on fire, Mr. Byrne. How do we know this? Because if you check back at yesterday's post we have the Panama Environment Ministry on record as stating:

In reply to your query, the Category III environmental impact study establishes requirements that the company must submit for evaluation and approval before the start of any works and before the start of operations. The company must also present additional environmental impact studies for activities that were not approved in the Category III.

This means that, even though it has ANAM approval for the Category III study, the company cannot continue its activities until it completes the additional requirements.

As they say in Spanish "Pez por la boca muere" (the fish dies (gets caught) via its mouth), because those additional requirements happen to be a list of 40 measures, including big stuff that takes a loooooong time for approval such as location and engineering of the tailings dump. Check back at Mr. Byrne's on-the-record statement, people. It's patently untrue and there's a word for that kind of statement; the word is 'fraud'.

So now we can trundle off to the OSC and register an official complaint about these scam artists who pretend they have a legal, decent, operative gold mine. And as usual the OSC will do nothing, because a bigger bunch of lilly livered apologists for corporate thievery has yet to be invented in the industrialized nations.

Chart from "bolivarian bravado" showing the state of (some) economic play

The London FT, via its Venezuela correspondent Benedict Mander, is running a series on the Venezuela of today. I've mentioned on this blog in the past that Mander is one of the few fair voices writing about Venezuela in the English-language media (mainstream, at least), and this series is no exception.

What I like about the reports is that they give you the good, bad and ugly about today's Venezuela but don't ram ideology down your throat. You get facts, get treated as a thinking human being and get to draw your own conclusions. There ain't no op-ed "my opinion" BS tacked on the end, thank the stars.

Please note; despite the tone of words used in the title lines the reports are very balanced affairs.

As it's the FT you might have to register to read all three, but the registration is free (and mercifully quick). So make the effort if needed and read these three reports. Recommended stuff, and good job done by Mander.

Here's an interview with highly respected stock analyst David Coffin, the subject being Canadian uranium junior Hathor (HAT.v). Not my metal and certainly not my geographical area, but as Mickey Fulp also likes this stock I thought I'd pass this one on. DYODD, dude. Here's the link.

This Moody's Economy.com special study utilizes unique data from Equifax and Moody's Investor Services to assess future levels of credit degradation and where the greatest challenges will be realized. The study evaluates the threat mortgage credit problems pose to the housing market and broader economy, and the scenarios under which these problems could result in an economic recession.

12/5/08

In Argentina, one of the most popular mixed drinks (the most popular, probably) is Fernet and Coca-Cola. Known by the slang name "Fernando", it was first drunk by the lower social groups in the 1990s but quickly spread to all people from all walks of life. Make one yourself if you like; one part Fernet (Branca is by far the best brand) to six or eight parts Coke (personal taste) in a long glass with ice.

So when a truck carting thousands of bottles of Fernet Branca tried to cross a level crossing at the wrong time and got hit by a passenger train yesterday, locals had the choice of helping the seriously injured driver and seven injured people on the derailed train, or helping themselves to the bottles lying strewn across the tracks.

No contest; in minutes the bottles had been spirited away by locals in the Paternal barrio of Buenos Aires. No word on the driver since he was taken to hospital, but you can bet on there being one helluva party this weekend in houses and flats around the crash site.

Holy cow, base metals got flattened today. Copper now sub $1.40, zinc back under 50c and soon the miners will be paying clients to take their lead away. It'll be "buy a tonne of Zn, get a tonne of Pb free."

Jaguar (JAG) down 9.4% at $1,92. I bought a bit yesterday. Sad to say it won't be my last ever mistake in the markets, either. Ho hum. Holding for the moment, but gold needs to perk up in the next couple of days or I puke and take the loss.

FCX down 9% and PCU down 10%. Unsurprisingly, the copper sisters are getting whacked by the heavy hit in the base metals complex. If I were brave I'd buy FCX here. I'm not brave. I'm a whuss, remember.

Dynasty (DMM.to) down 9% at $1.32. It's still up nearly 10% since I called it as a buy on Tuesday, but the $1.50+ numbers printed on the back of yesterday's good volume have melted away under the general sectorwide malaise. I bot yesterday and i'll add if it goes under $1.30.

Fortuna (FVI.v) down 11% at 53c. Uff, today's depressing. C$45m in bank and 0.42xNAV, fer cryin' out loud! Cheaper than very very cheap indeed.

Petaquilla Minerals (PTQ.to) down 15% at $0.40. Every cloud has a silver lining.

Meanwhile, in the eye of the storm the US dollar ups nearly a point to 87.43. Anyone beginning to believe me when I say that the USA will prop its currency up indefinitely and doesn't care if it drags the world down into recession with them? Yeah, from the looks of my mailbag the last couple of days, the idea is starting to get through.

Ever since this Petaquilla Minerals (PTQ.to) press release came out last week I've been trying to write this post. The most excellent Bananama Republic blog and I compared notes on the subject last weekend and it's been itching at me all week. I think the mental block was caused by the press release itself, as it's so amazingly and totally full of shit that it takes my breath away. So here's a paste of the whole PR and my comments interspersed:

VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Nov 28, 2008 -- Richard Fifer, President and CEO of Petaquilla Minerals Ltd., today announced that the wet commissioning of the gold production facility at the Company's 100% owned Molejon gold deposit in central Panama has begun.

For those who don't know, "wet commissioning" is fancy minespeak for "test run" when at least part of the production circuit involves liquids. In the case of PTQ.to the company is using Carbon In Pulp (CIP) extraction technique that requires a tank full of cyanide solution.

The ball mills and other critical equipment are now being tested prior to the commencement of production. The first gold pour has been scheduled for the latter half of December 2008.

PTQ can schedule all it likes, cos this mine isn't going to produce anything for the moment. Bet your last penny that the comapny will announce some sort of hitch or delay to the process soon

The Company also reports that the National Authority of the Environment (ANAM) on November 26, 2008, issued Resolution DIEORA IA-809-2008, which approves the Environmental Impact Study Category III, submitted by Petaquilla Gold, S.A., for the implementation of the Molejon Mining Project and adds other measures mandated by the ANAM.

"Adds other measures". You note that innocent little phrase at the end of a paragraph that trumpets the approval of the company EIS? Well, in fact those other measures are nothing less than 40 (forty) different measures that ANAM has ordered to comply with, being covered by five separate environmental impact studies or addenda to the sole peice of approved EIA paper held by the company.

Get this clear as a bell; PTQ.to has spent three years getting one EIA study partially approved by ANAM, but before it is allowed to go into production it needs the gov't of Panama to sign off on another five documents that contain a total of 40 rules and regulations with which it must comply. The measures required by ANAM aren't small observations, either. We're not talking relocation of waste paper baskets here, we're talking about things like PTQ hasn't said how or where they're going to dump tailings. Y´know....minutae like that. And the company wants the investing public to think it's a gold producer as of December 2008. These people are liars.

The next step in the preproduction process is the electro-mechanical operation of the plant which is scheduled for early December.

Errr...no. The next step is getting your mine to comply with the mandates set out by ANAM. If you don't there's no "next step". Ever

The Company will update shareholders on a regular basis as the full commissioning date approaches.

Don't hold your breath, shareholders. Full commissioning date is likely to be "never". This is because of a couple of other "small details" that people like the odious Fifer kinda forget to tell people. For example, Fifer is under charges of embezzlement in Panama. Y´know, minor details like that. Fifer is also pally pals with Panama's President Torrijos, whose mandate finishes once the March 2009 elections are done. A surefire issue in this election campaign will be environmental issues, and Petaquilla is certain to be held up as an example of how not to build a mine. Any new admin is likely to ride the overwhelming local opposition to the PTQ operation in order to get into office. Politically, time is running out for the scam artist Fifer.

How bad is the PTQ enviro record? Very bad. Just last month the same ANAM environment office that partially approved the PTQ impact study slapped a fine on the company to the tune of U$1,934,694........ and thirty-four cents. The reasons for this fine include the non-submission of an EIA before starting site construction, damage to the ecosystem, soil erosion (check the photo above), loss of biodiversity and contamination of local water supply.

Now I found it kinda strange when ANAM approved the EIA study just a week after slapping that $1.9m fine on PTQ's tush. So being the stickler for details that I am I shot a mail to a certain Natalia Young, who's the national director for envronmental quality in Panama. Here's what she wrote back to me (translated by yours truly)

The process of administrative investigation that sanctioned the company Petaquilla (Minerals) with a fine of U$1,934,694.34 and ordered the suspension of activities until all environmental impact studies are approved by permits and authorizations controlled by ANAM is independent of the evaluation processes of these measures of environmental governance. It would be imposing a double sanction if we were not to evaluate them or even reject them.

In reply to your query, the Category III environmental impact study establishes requirements that the company must submit for evaluation and approval before the start of any works and before the start of operations. The company must also present additional environmental impact studies for activities that were not approved in the Category III

This means that, even though it has ANAM approval for the Category III study, the company cannot continue its activities until it completes the additional requirements.

Or in other words, Richard Fifer is lyng through his teeth and using neat and sly tricks of semantics in company press releases to make it sound like his company has enviro approvals. He's casting out an illusion that PTQ.to goes operational in December when the truth is that the company is nowhere near the point when its government will allow it to produce its gold. This because it's run by a bunch of corrupt assholes who belong in jail and couldn't build a sandcastle, let alone a mine. But since when has that mattered to companies listed on the TSXV?

Meanwhile, another criminal with no record (as yet) is shamelessly pumping the stock to the local Panamanian ex-pat community. Don Winner is a sleazy lowlife that runs the website "Panama guide". Well known for his penchant of being in cahoots with any local sleazeball that'll throw him a few bucks, Winner is trying to get the English-speaking community to buy this PoS stock. So hopefully this post will get through to the innocent lambs before they are parted from their moolah. Don't touch PTQ.to with a bargepole, people.

PTQ announces it's going into production and the share price drops...yeah right.Check Canadian Insider and you'll see howCEO Fifer is propping his own stock, too

President Twobreakfasts was on Peru radio today. His message was"Businesses have no material reason to lay off workers or reduce investments" and similar demagogic guff and nonsense about "the fear factor".

Nice timing, as Peru's biggest steelmaker 'Aceros Arequipa' today announced it was suspending production "for maintenance purposes", but customers shouldn't worry because they had enough stock to continue to meet demand. (UPDATE:here's Reuters English language on the story). Or in other words the 40% drop in demand for steel products (especially re-bar used in construction) means the market is now way oversupplied. Note that October stats showed a 14% increase YoY in construction activity in Peru.....go on, take a wild guess about next year's figures...

Acero Arequipa's maintenance program has suddenly been brought forward from 2010, but don't worry. All is well. I mean, just one month ago Alan himself said that Peru was totally protected from any economic crisis. Isn't the word of your President good enough these days?

This chart is witness to the best investment decision I made this year. Arch-mumbo-jumbo TA proponent Gary Biiwii for one will adore the fact that a simple chart saved my fundy neck this year. So be it...capital preservation comes in myriad form. I ain't proud....well, try not to be.

12/4/08

Today Ecuador's FinMin Viteri held a presser to tell the world (translation Otto):

"If we have to reach default, we will do it responsibly. The national government does not recognize the illegal and illegitimate debt at all. Ladies and gentlemen, we are not playing; we are very serious and conclusive when saying "The national government rejects the illegal and therefore illegitimate debt."

Spooky huh? WHoooooOOOOoooooOOOOOoooooOOOOOO. Just the kind of thing Andres Oppenheimer can report on tomorrow while trying to forget what an idiot he's made of himself recently. Here's the Reuters version in English too...spookier and spookier... whooOOOoooOOOooo

So interesting that Brazil's main international advisor to President Lula, Marco Aurelio Garcia also said today, "Ecuador is going to pay its bill...we (Brazil) have the means with which to convince (them)."

Also interesting the way the Veep of the debt commission last week admitted that Ecuador will have to pay for the time being. There's no other way to take the complaint forward and maintain the "responsible" position. Right now Ecuador has two firms of US lawyers working on the same thing...betcha a dollar they advise Studmuffin&Co to keep paying the coupons while making an international case of it all. Nah...betcha ten dollars, in fact. Any takers?

Also interesting is the little snippet that Stephan Kueffner of bloomie picked up on. It's buried under the dramatic headline, but Bloomie does manage to mention that Ecuador quietly and without much fuss paid a U$1.2m coupon on one of its Brady bonds this week. The reason why it paid? To stay legal and responsible.

But most interesting is the action where it really counts, namely the bonds market. The key 2012 Globals sank to 21c on the dollar when the whole shebang first started. This time last week they were trading at 25.5c and 26c on the dollar. Today the same bonds closed the day at 31.5c on the dollar having touched 32c after (not before) Viteri spoke. That's a 50% climb since the drama began, and 20+% in the last couple of days. Money talks and BS walks, dudes and dudettes.

Speaking of BS, the whole thing comes to its inevitable climax on Saturday December 13th. That's the day Studmuffin has chosen to reveal to the world whether Ecuador is going to pay the delayed coupon, the announcement coming as part of the Studtastic* Roadshow to be transmitted on Radio MUFN. The guy must be after the ratings...hey, I wonder how much a 10 second slot to advertise this blog would set me back?Finally, a word for those of you who've taken this blog's advice on Ecuador debt throughout this soap opera: So far you're making good coin but think about the retreat position that the idiots who called end-of-the-world over Ecuador's bonds will take. When Ecuador pays the coupon on Monday 15th, you can bet your sweet bippy you'll hear resounding cries of, "Well, they paid this time, but the issue isn't going away and the next round of coupons is steeper and you'll see you'll see I'm right y'know even though i'm wrong...." blah blah yada yadaaaaa ad infinitum.

The point here is that selling the news is a likely scenario as the pea-brained shills will still be preaching a sermon to people who want them to be right, thus maybe profit-taking on half your position on Friday 12th December is the prudent course. Biz iz biz.

Paul Krugman on real balance effects. When a Nobel prizewinner takes time to explain these normally out-of-reach concepts to us mortals, take time to read it. This is the goodstuff and good map-marking for next year.

The Economist on Peru. Every now and again, the mediocre LatAm coverage in The Economist is enlightened by a decent piece of script. It happened today. This is a good snapshot of Peru.

Trend and Value on the Aussie dollar. Look, this guy knows his stuff when it comes to trading currencies, and all of a sudden the OzDollar (or pound or Peso, or waddeva they have over there) has lit his fire. There are three or four recent posts on the AUD to check out. So do so.

Klishtina explains that credits will not be available for plastic surgery.

This morning Klishtina unveiled a P$13.2Bn economy stimulus package for the Argentine economy. Most of that hefty sum (well, U$3.82Bn is what used to be considered a hefty sum until the Benny&Hank show rolled into town) is available via credit lines at Argentina's state Bank of Investment and Foreign Commerce (the Banco de Inversión y Comercio Exterior, normally known as BICE). Mostly for industry, of course, but a chunky P$3.5Bn (just over U$1Bn) is for consumer white goods credit. Great time to change that old washing machine, my porteño friends.

Also in the package is a 5% drop in export tariffs for Argentine grains. Remember all that fighting when they tried to put the tax up this year? Here we are dropping the tax and the agro boyz say it's too little too late. Bunch of ungrateful idiots is what Otto says; this move is one of those moments that proves even the weird, pretzel economics logic they use in the bosom of Peronism sometimes gets it right.

Other people think so too, as the Merval index is rallying today and beating out all other local stock markets. Up 3% today and 9% in the last couple of sessions (i.e. since unofficial word of the package hit the streets of downtown BsAs). So all in all a fair response from the Klishtina gov't to the recessive powers imported from afar. I'm no fan of these K people, but this is a good move (not perfect, but good) at the right time. Good to see.

Corriente (CTQ.to) (ETQ) up 5.25% at $3.81 and also doing very nicely volume-wise. Ecuador is suddenly the market's new best friend? Go figure........

Nice to see Vena Resources (VEM.to) popping back after drifting lower recently. The malaise in the whole market sees these things sell off til suddenly a bit of common sense prevails. I say "a bit" of sense, because this thing is worth multiples more than its current PPS. Remember I'm biased, as VEM is a site sponsor. But remember I only allow good companies on board here.

Exeter Resources (XRC.to) (XRA) down 6.6% and selling off further today. Here's comes Otto and his annoying "toldya so" again. While this stock price starts with a '1' don't even look at it. Way overhyped.

I'm still following ECH the Chilean ETF pretty closely. At $27 and bits today and the news that Chile "enjoyed" negative inflation for November is a new ingredient into the mix (though not really unexpected, given that Chile imports so much of its energy needs). ECH is basically a currency play on Chile, so any dollar weakness will benefit it greatly. On the radar. The volume is always low in this thing, and that's a negative to take into account.

Jaguar Mining (JAG) at $2.14 is back in the buy range here. I'll be looking to add to my reduced position at these prices. If I do take the plunge (and it's very likely) it'll be my second buy of the day....... a long time since I did that. I like this stock at this price...a lot.

An interesting press release from Mag Silver (MVG) (MAG.to) this morning concerning the Fresnillo buyout offer. Here's the link, and here's the main comment from Mag's CEO:

Dan MacInnis, CEO of MAG, commented, "This may be the first time in history that a hostile bidder has announced a bid at a price lower than the closing market price of the target's shares on the trading day prior to announcement. Analysts and a number of shareholders are now calling this a "take-under" offer. We are a little mystified by Fresnillo's actions, but our Board understands its fiduciary and other obligations and will respond more formally in due course. In the meantime, our shareholders have no need to do anything to respond to the Fresnillo announcement."

As this chart points out......

CEO MacInnis is stretching the truth with his argument today. Check this Reuters report dated December 1st for more evidence. This means just one thing; the MVG position is weak, and all the rhetoric in the world won't cover that fact up. And it all boils down to one, simple point: Nobody else will buy Mag Silver. The company has two choices;

1) Accept the Fresnillo offer2) Watch the stock price fall to where its silver peers are trading.

The only reason that MVG has held up better than peers was the expectation of this FRES.L offer. If it's rejected, nobody else will buy MVG. Take that to the bank. And the result will be the wholesale dumping of its share price.

Be clear; Fresnillo has played this offer very smartly and has MVG over a barrel, the weak counterarguments shown by the MVG CEO today are testimony to that. He may be pissed that this offer means his options are out the money, but that's kapitalism, komrade.

"..With the decks cleared, give the stock a couple of days to settle and then it's a trading buy. FCX is now front'n'centre on my radar."

Lo and behold, this morning presents a great example of what I'm talking about. Some dude named Marc Courtney writes at SeekingAlpha today on how he's bailing on FCX due to yesterday's news. So as I'd never read the guy before and on the basis of "If it looks like a duck and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands*", your DD loving Otto checked out Courtney's previous market musings.

In this post dated October 5th, this joker is long FCX amongst other stuff (plenty of crap written about silver in this one). Strange how he claims he'd "just bought" FCX yesterday, writing today that "I was fortunate. My buy limit order was executed at $17.80 and I was able to sell my shares of Freeport-McMoRan Copper & Gold (FCX) at $17.50."

There's a whole heap of crap to choose from and the above is scratching the surface of his mediocrity. The guy has no scruples, or is delusional, or most likely both. What he must be is a lot poorer than he was six months ago. I haven't even started on all the goldbug and silverbug conspiracy crap he comes out with. Go have a look at his library of titles yourself.

I don't bother submitting my stuff to SeekingAlpha any more and it's because of dumbasses like Courtney. The site has contributors of value (the macro stuff is good), but the resource sectors in particular are full of crud and dragged down by lowest common denominators like this clown. However, checking out the site (via the title lines every few days) is a useful exercise in sheep psyche.

Put simply, half-baked analyses from ego-monsters like the Courtneys of this world are gift-wrapped contrary indicators. Use them wisely.

12/3/08

Today in Ecuador, the congresillo continued to take arguments from both sides about the new mining law. Indigenous movement CONAIE spoke today and asked for the law to be suspended. The arguments used by CONAIE were varied, but included the need for a full dialogue with the people to be affected by any mining development as its mainstay line. In the rebuttal period of the debate, the government argued that before the law was presented there were full consultations with all groups to be affected by mining activities.

Two conclusions drawn from today's Congresillo session:

1) The government made much the better argument to the members of Congresillo.

2) The simple fact that the debate continues and the congresillo is spending sequential days on the issue shows the mining law is now close to being approved.

This means that here I am, once again, banging on the table, doing my best Jim Cramer impersonation and telling you that YOU HAVE TO BE LONG DYNASTY METALS(DMM.to). And this isn't because I'm long, either. As a matter of fact I still have no position in the stock as yet. I've been looking to get long the last two days, but with such sketchy volume I haven't hit a fill.

If you prefer, use Corriente (CTQ.to) (ETQ) as your vehicle to play the imminent approval of Ecuador's mining law, but the value investor that dwells inside me cannot ignore DMM.to at these prices. This is one of those trades that don't come along very often, and when they do you want to be there. It's the right stock at the right time. I'll leave it up to you to play either for the short term pop or get in for the longer haul. All I know is that DMM.to right here right now is the most wonderful buy and I'm staking my reputation as a fundamental analyst and a close watcher of LatAm politics on that statement.

I'm very much in favour of social equity, as plenty of the posts on this blog witness. However I'm also an equities analyst by trade and my capitalist roots are strong. It's time to make a profit. Which brings me to the pitch, as I'm still trying to raise money for the Barbie doll's house my daughter wants for Christmas. Today I sold six copies of my NOBS report on Dynasty, which is a good start but I need to sell a few more. I'd also like this blog to pay for itself a little.

If you want to support IKN and do yourself a big favour at the same time, here's your big chance. To find out the details of DMM.to and why the fundamentals are so great will cost you the princely sum of U$10 (not even the commission you pay on a trade). The report crunches the numbers and shows you what DMM.to is capable of, even under a heavy tax burden and even with gold at $800/oz (or less). If you'd like a copy, my PayPal account is under.....

otto.rock1 (AT) gmail (DOT) com

...... or if you like you can drop me a mail at the same address. Or both. As soon as you deposit U$10 in my account and I have your mail address, the report is yours. However that's the end of my hard sell pitch because I'm telling you now, the reco in the report is the same as the reco in this free-to-read blog.I can't be any clearer or fairer than this. Do with this information what you will, but remember where you heard it. As regular readers know, I don't normally pound on about individual stocks being great opportunities, but this is "shoot fish in a dry barrel" time.

Buy DMM.to. Nuff said.

December 1st, when 6,000 people marched to the doors of the Ecuador Presidential Palace in support of mining. Scenes unlikely to be highlighted by the treehugger NGOs

The bits you don't normally get to see (or see once it's too late), courtesy of your loving and caring IKN:

Dateline Paraguay (beepbeepbipbipbeepbipbip)Brazil's Bandes financing agency is under fire from another quarter. After President Studmuffin said "ain't gonna pay your illegal debt" and kicked up a world-sized fuss, Paraguay's megatop wonderful President Lugo came out with his country's own version today.

Lugo said that Paraguay would exhaustively study the legality of the debt Paraguay has with Bandes (also known as BNDES) and he was going to commission a group "of high moral standing" (man this guy is great) to study the debt taken out with Brazil, nearly all of it to build the joint Itaipú dam project.

Dateline Argentina (beepbeepbipbipbeepbipbip)Argentina's lower house today easily passed their part of the law proposal to nationalize Aerolineas Argentinas (and its internal flight service, Austral). The upper house Senate must also pass the law before it becomes a reality.

The Klishtina gov't is likely to pay current owner, the Spanish Marsans (which started life as a travel agency) $1 for the company by the end of December, all this after Marsans and the government couldn't agree on a price to pay. Aerolineas has a heavy debt burden, but the two sides differ widely on exactly how far in the mire it really is. It all sounds like a very Argentine bizdeal to me.

Dateline Argentina (beepbeepbipbipbeepbipbip)More news from Klishtinalandia, as she today sacked her environment secretary Romina Picoletti. The official reason is the lack of progress made in cleaning up Buenos Aires' Riachuelo open sewer (which was a river a couple of hundred years ago). The snarky reason is the lack of progress in enviro affairs since she got the job, except the progress in feathering her own nest and those of friends and families (4x4s suddenly parked in relatives' driveways, we're led to believe). But the real reason is for the Glacier Protection Bill that was passed by Argentina's parliament but vetoed by Klishtina herself. Picoletti was the driving force behind the bill and Barrick (ABX) and its big bad Pascua Lama gold mine project was the driving force behind the Kirchner decision. The "experienced in LatAm affairs" Barrick wins. Hey, what's new?

Dateline Chile (beepbeepbipbipbeepbipbip)Ingrid Betancourt has one helluva good PR agent. She hits Studmuffin on Monday, Klishtina on Tuesday and today it was Santiago and Michelle Bachelet. Bachelet chose the moment to announce she was nominating the ex-FARC hostage for the Nobel Peace Prize. At least Bachelet can look Ingrid in the eye and tell her she understands, as Chile's top cheese was also imprisoned for her politics in the Pinochet era. Tomorrow Betancourt meets and greets someone who skipped off to France to avoid imprisonment. Yep, she's in Peru.

The goodThis year Peru's anti-narco forces have intercepted 32 metric tonnes of cocaine and coca paste. That's up from the 28MT captured in 2007.

The badIn 2007 Peru is estimated to have produced 290MT of cocaine. This means 90% of the drug is got through. This year all experts concur that production has been significantly higher though there are no final numbers being bandied about as yet.The uglyPeru refuses to admit responsibility for its own problem. According to the government, it's the fault of Sendero Luminoso (Shining Path). It's the fault of the Bolivians. The latest excuse is "The Mexican Cartels". Ain't no drug money corrupting our politicians, oh no no no no no........

And finally, the comparisonBolivia produces an estimated 100MT of cocaine per year. In the first 11 months of 2008 its government seized and confiscated 25.5MT of cocaine and coca paste. And remember, Peru is the USA's golden boy and Bolivia doesn't do enough to combat its problem.

To compare, PCU is 3% down. Otto sez that FCX is now the best buy of the two. With the decks cleared, give the stock a couple of days to settle and then it's a trading buy. FCX is now front'n'centre on my radar.

Dynasty Metals (DMM.to) up 2% at $1.38 and also up on my screen. Volume is still fiddly and I'm still not bought. Get more info on DMM.to from here(five people have already.... come join the club and make my kid's day).

Wells Fargo (WFC) up 4%. Most definitely not my normal stomping ground, but I thought I'd pass on a note received from an e-mail friend today. He wrote:

I got forcibly bought in on a short WFC position. Fortunately, no harm done.

I've been watching this for a while and it is very odd. WFC is widely held, huge market cap, and has a 3.2% short interest. I've had the position for several months. The broker claimed that they were "unable to borrow shares" and that "new SEC rules require prompt settlement." If that was the case, I would be bought in three days after the trade.

Mag Silver (MVG) U$4.58. If you have it, sell it. There's no counterbid coming so you may as well bank the money now. Well played, FRES.L. Mr. Market even offered $4.70+ this morning; if I held MVG (or MAG.to for that matter) I would have jumped at that price and sold the lot.

"OH C'MON OTTO...THIS IS GETTING BORING!" is the cry from the crowd. I agree, and that's exactly why the Zn chart is getting a third or fourth viewing this morning. It's a window on process.

With the drop to Zn $0.505 this morning the possible price breakout has been slapped down once and for all. With Zn at $0.525 it was borderline stuff yesterday I but was still waiting for a definitive move.

Y'see, when you're on the sidelines waiting for a clear buying chance this is what happens. You have to watch, wait, activelylook for the clear chance and not just the "hmmm...could be so let's jump in" chance. It's about discipline. It's about patience. It's about that Warren Buffett line;

"I like to shoot fish in a barrel. But I like to do it when the water has run out."

Since this blog started I've banged on and on about capital preservation. This small series of charts about spot zinc is that attitude in action. Preservation of capital is by its own definition a boring activity. But when the market turns and the bull is let loose again, I'll have a large wodge of ammunition to use on it. What will you have?

I find it amazing that yesterday's revelation (no other word will do) there were no e-mails on the Raul Reyes FARC laptop computer hasn't made any headlines this morning. I've just checked on Google and nobody's running this story outside of fringe media in the Spanish language.

Surely you remember how world publications up to and including The Economist told us about the "huge caches of e-mails" that implicated the world and his wife (most notably Chávez, but natch natch and thrice natch, yeah?). In fact that Economist note is shown to be a very large crock, as it makes constant references to e-mails that (and get this very clear) do not exist.

This is, of course, precisely why the media won't be dwelling much on this story. The news that the "thousands of e-mails" they used to whack those nasty lefty people over the head with do not exist is rather embarrassing. So in true style, the story will be ignored and spiked in newsrooms around the world. Not a single apology, not a single correction.

It does remind me of the pristine condition of those laptops, as shown by Colombia to the world in May. That's the official police photo above....I mean, just look at it. There's not a scratch on those machines. Don't you find that slightly weird for three pieces of computer equipment carried round the jungle by a bunch of terrorists? Don't you find it weird after Reyes and his cohorts had the crap bombed out of them by several bombing runs and then commandos piling in to give them les coups de grace a few minutes later? And then there was this story uncovered by Daniel Denvir....the one about how the photos that Colombia leaked as from the FARC machines were proven to be Colombia intelligence snaps.

Welcome to the blogosphere. Raw news, unfiltered, undumbed-down, treating you like a thinking human being.

This link to the FCX press release this morning is pretty much required reading for anyone concerned with mining. There are far too many points to list here, so just go read it yourself if you haven't already. Basically it says "we're cutting back".

Re: the FCX LatAm operations, the biggest chunk of news is the (not very unexpected) decision to defer the El Abra sulphide copper project and save on the capex. Also notable was a little line about the producing mines down here (Cerro Verde, Candelaria, Ojos del Salado, el Abra et al) that says the company will prove up more reserves than it mines. Overall copper production will be 1.4MMT in South American operations compared to 1.5MMT in 2008.

Final thought: This is a good PR. I've made mention of a couple of things to look for when reading bad PRS recently, but when this kind of information dispersal is done right they're very useful things. This PR is one of the good ones. Mining IR depts please take note; this is the kind of disclosure that analysts appreciate and want to see all the time. It scores you great bonus points with the parasite community that we are.

Having been shopping for christmas presents this morning and having seen the price they want for a Barbie doll's house, I am obviously in need of dinero for the end of this month.

Therefore, having written a NOBS report on Dynasty Metals, I'm offering a copy to anyone who wants it for the modest sum of U$10, payable by paypal.

For more details, or to credit my paypal account, use....

otto.rock1 (AT) gmail (DT) com

.... as the address. You can also use the paypal button on site. Thanks in advance for your support of the site, and I'm sure the report will be useful for anyone into gold miners and/or juniors. This thing is a raging buy, and I'll show you why. Best ten bucks you'll spend this year.

WORLD EXCLUSIVE!!! IKN has got its grubby hands on tomorrow's Andres Oppenheimer column to be published in the Miami Herald and syndicated media. This is hot!

December 4th, 2008

Dear loyal Miami Herald readers,

On many occasions I have tried to make out I get privileged information from high ranking authorities and pass this information on as exclusives. There are many examples of this, but one was on July 9th 2008 when I wrote that:

"...According to thousands of e-mails found in the laptop computers of slain FARC commander Raul Reyes, which Interpol forensic computer experts certified were not tampered with by the Colombian government, Chavez and the FARC were pursuing a two-tier strategy.

Dozens of e-mails in the rebel computers show that the FARC commanders and Chavez were building what they referred to as a "strategic relationship" to strengthen the Bolivarian movement in the region."

I have misled you, my audience. I apologize for indulging in my own anti-Chávez fantasies and pretending they were real. I also offer my apologies to President Chávez of Venezuela for having misrepresented him for all this time.

Dynasty Metals up 10% at $1.33. By the looks of the bid/ask action there's more upside to come today even though volume is low. This is good. Volume too low for Otto to get in as yet. This is not so good. Watching and waiting. In no hurry here, as $1.50 a share is still dirt cheap. We want liquidity. Also waiting on GLD. Cudda got sub $77 today but decided not to move in. Still in cash, and the only trade that tempts today is DMM.to.

Corriente (CTQ.to) (ETQ) also doing well. Up 15% on lowish volumes. Studmuffin's call to mining arms yesterday is getting love from the market....as well it should.

Kinross (KGC) (K.to) still impressive. For sure it's also getting some boost from the Studmuffin pep talk, but it's been the centre of attention for quite a while now. I hear all the main Canadian brokerages pumping the thing, too (though it's very debatable on whether that's a good or bad thing). Good volumes, and the dips got bot yesterday again.

Exeter (XRA) XRC.to down on low volumes, the Canadian stock at 1.67 loonie. When it gets to sub $1 then it might be worth looking at, until then it's overhyped and overvalued. And hey wow!! Quel surprise!! Chairman Yale ControlFreak Simpson has just loaded up on hundreds of thousands of cheap options. Ain't OPM great, yeah?

Meanwhile, The Albatross factor is in full swing. Colossus now hitting new 52wk lows at $0.45....

1) It's a gold miner that, if given the necessary permits, would be up and producing in just one quarter.

2) It's extremely cheap. Do the easiest of DD and note its share price at present ($1.21), shares out, targeted gold production and cash cost schedule (and add a little bit to that number to account for the changes in supply costs, but they're coming down, too). Find out for yourself how cheap it is. If you want me to run the numbers for you, drop me a line.

3) Note the good management team, and key people from Ecuador political circles on board, too. Also CEO Washer knows Ecuador backwards and has kept the faith all this time.

4) Note how Mining minister Palacios defended the new mining bill being debated by the Congresillo last week. Palacios used very strong arguments all round and left a good impression about how the new mining law goes hand in hand with the new constitution.

"Mining in a country like Ecuador is a great opportunity to generate jobs and wealth that will allow us to get out of underdeveloped (status)."

DMM.to is now a total no-brainer. CTQ is also cheap, but DMM.to offers exposure to gold...and that's the metal to buy into right now. So no more playing coy about this stock. DMM.to is stupidly, amazingly cheap and has discounted a political risk that is disappearing fast. Buy it now. DYODD. Otto hath spoked. Otto will be buying, too. Screw it, it's time to make a stand on this stock...imho it's a double at the very least (and you can quote me on that or throw it back in my face in 6 months' time). I repeat, DYODD, dude.

P.S. Note that smart gold market watchers like Claude Cormier love this stock too. If it's good enough for Claude, it's good enough for me.

In what must come as a shock to nobody at all, Hugo is now putting the wheels in motion for a referendum on presidential re-elections. Why so? Here are five points to consider. Add some more if you want:

1) Under the present rules, he gets to be bigboss until 2012, then it's all over. It's no secret that Chávez wants more time in charge. It's no secret that his party want him there, too.

2) With a change of plan, he can get another seven year term and rule the revolution until 2019. That's one thing that's rather different from most administration term times in South America; Evo gets 4 years, Twobreakfasts gets five. Hugo gets a full seven.

3) Though his supporters and party faithful might not want to admit it, the revolution really is a one man show. There's nobody with even 10% of the charisma of Chávez in his party. Come to think of it, he outshines the opposition by a mile, too. Love him or hate him, there's no doubt who the bossman is.

4) He takes his cue from Fidel on this one. Castro Sr has told him straight that the future of the revolution is in his hands. Not only is this true, but it also plays to Hugo's ego bigtime. Hugo is a willing student on this issue.

5) If it goes to the vote now, Chávez will almost certainly win. Fact is that behind the triumphalism of the Chávez opposition and the media crowing that the election was some kind of loss for Hugo, the results weren't that bad at all. There were no big shocks in any result, and his brother Adan won the supposedly tight race for Barinas (note where the shouts of fraud are loudest). Also, there were many pro-Chávez voters who didn't vote in the regionals, especially in the provincial regions that were virtual locks for Chávez. This time he and the PSUV party machine will make every vote count and it's very tough to see him losing such a vote. Pro-Chávez got 53% of the popular vote on November 23rd...that would be a baseline, not a target.

So Chávez is pushing for a vote to be organized as early as January (as mentioned to his faithful yesterday at the swearng in of Rafael Isea as governor of Aragua yesterday). There's one thing about this guy known as a dictator by the idiot right; he sure puts on a lot of elections.

UPDATE: Quite correctly, I've been corrected four times already from various quarters that the Venezuela presidential term is six years, not seven. I blame writing before drinking my early morning java, but no real excuse. My bad and I appreciate the corrections.

.....Colombian inflation, both monthly since 2007 and 15 years by year.

There are clear signs that the high inflation burden suffered by Colombia this year is easing off. However the country has to get through its traditional price hike period of January and February before we know that for sure.

Taken on a long term basis, Colombia is a country that knows what inflation is by learning the hard way. That usually means they know how to handle it. Frankly, the price drops in the pipeline are going to come as a shock to the nation. Not such a bad time to be a retailer, I'd venture, as sales will likely drop but margins loom set to increase (something countries not used to the phenomenon seldom catch). Might suck to be a coffee exporter, though.

12/1/08

As part of this post on October 15th, your prescient Otto wrote that Fresnillo (FRES.L), Mexico's very large and very cashed-up silver miner, was going to move on Mag Silver (MVG) (MAG.to). The post wrapped up by saying:

"..Make no mistake; MVG in now most definitely in play. Fresnillo has decided to risk this bear market and try for MVG while prices are still low. Whatever, but Fresnillo has drawn a clear line under this current share price and the risk/reward equation most definitely favours buying MVG."

The only bummer is the price; at U$4.54 for the US stock it's just 3c above the 15th October closing price (though you could have got in at $4 a couple of days after my post), due to the sector-wide slaughter and not really much to do with MAG.to itself. So be it. Fresnillo is getting a very big bargain compared to prices of just six months ago. However it's taking on the risk if any prolonged slump in the silver market, but hey...it's a silver miner and it was always a clear shot to buy out MAG, so now's a great time. Smart move, I say.

Anyway, feel free to write in and tell me what an irritating bighead I can be at times. Thanks in advance. Here's the MAG.to 12 month price chart to round off.

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